SMSF Updates

Who Signs the Contract of Sale for Property Purchase in the SMSF?

There are three options you can sign the contract of sale for the property purchase:

1. The Bare Trust Trustee

In DKLR Holdings Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW), it was held that double duty may apply where the purchaser in the contract is the trust.  Some lawyers suggest that the purchaser is the bare trust trustee and not to mention the bare trust name in the contract of sale.

2. Bare Trust Trustee as trustee for SMSF Trustee as trustee for SMSF and/or nominee

DBA Lawyers has suggested to use the above format as the purchaser in the contract of sale. This format will show the custodian relationship between the bare trust and the SMSF and also their respective trustee names.

3. Bare Trustee as trustee for the Bare Trust

This is commonly used because the bare trust trustee is the legal owner of the property to be purchased and the bare trust is the holding entity.

SMSF trustee may be concerned about the double stamp duty if they have not used the correct purchaser name in the contract of sale. From our previous experience, there will no stamp duty applicable when the title to be transferred to the SMSF after the mortgage discharged:

• if the bare trust trustee is used in the contract of sale;
• the bare trust deed is properly prepared and executed;
• the timing of the sequence of events is correct. For example, the bare trust trustee must be registered and the bare trust deed must be executed before signing the contract.